Is you career “Bloom Where Planted” or “Seize the Day” - either way Illinois Secure Choice has you covered.
Of all the choices you individually make in your career – from short stints to gain experience to changing jobs for a better environment - one aspect of your financial life that gets short shrift is how you save for retirement and it is a shame. The best time to start saving for retirement is immediately – as soon as you start working – even if you can only start with small amounts.
To bridge the gap, the State of Illinois is setting up Illinois Secure Choice which is an auto enroll Roth IRA program. Employers who have been in business two years and have 25 or more employees in Illinois must offer Illinois Secure Choice as a payroll deduction if the employer does not sponsor an employer retirement plan such as a 401k plan. The target date for this new program should be late 2016 or early 2017.
What are the benefits of this program?
No lost opportunity. If you move from job to job you have a plan to defer into if your current employer does not have a retirement plan. The base contribution is 3 percent – you as an employee can opt out but the payroll deduction must be made available to you.
Why do you want to do this?
You have heard “pay yourself first” but it is hard to do. For many people a payroll deduction is the best way to make sure something happens before the money gets used for something else.
Do I have other options?
Yes but the first order of business is “know thyself”. There are abundant resources for setting up your own private IRA but why do people delay doing it? Is it 20th on your list to do? Can you only contribute small amounts to start and don’t have the time to look for a suitable IRA vendor? Are you waiting for when you finally have the big job and hope for big benefits that make up for lost time? Not making a choice is lost opportunity.
Is this better than a 401k?
A 401k lets you defer significantly more of your salary and has the protection of ERISA - a set of laws that protect retirement plans. A well designed 401k had a wide range of investment options and it is a huge opportunity if your employer offers a match. Put a gold star in your employer’s column and get educated on how to best get your money to work in a 401k plan.
Best general advise?
Whatever age you are – start to save right away and look for good available choices. Be savvy and understand how your money is invested and your costs for investments. It takes time to build your financial fitness so start the process right away.
For more information on Illinois Secure Choice or Employer Sponsored Retirement Plans please visit: HunterBenefits.com
Katherine Tipper – is President and CFO of Hunter Benefits Consulting Group – a firm that helps employers find good solutions for their retirement needs.